The capacity utilization rate of the 53 independent electric-arc-furnace (EAF) producers across China which Mysteel monitors weekly continued climbing for a fourth straight week last week, rising by another 13.35 percentage points on week to near 26% as of March 19 as more makers switched furnaces back on, according to Mysteel’s survey.
“The warmer weather and the slowdown in new COVID-19 cases encouraged more building contractors to resume work on their projects,” a Shanghai-based analyst said. “As a result, the recovering downstream demand gave more EAF producers confidence to resume operations,” she added.
The restart of EAF mills also had some impact on steel scrap consumption levels. For example, as of March 19, daily consumption of steel scrap among the 61 blast-furnace and EAF steelmakers under Mysteel’s regular survey edged up by another 33.5% on week to average 2,233 MT/day.
However, though steel demand has improved, actual steel consumption was not as robust as the market expected, Mysteel Global observed. “Most steel end-users are taking a rather cautious stance right now and had only scaled up their steel purchases marginally when prices dropped,” said a Shanghai-based long steel trader. He mentioned that the precarious sentiment of the market made it hard for steel prices to be fully supported.
As of March 24, China’s national average benchmark price for HRB400 20mm dia rebar had decreased by Yuan 29/MT ($4.1/MT) on week to Yuan 3,641/MT, while Mysteel’s steel scrap price index declined by Yuan 37.9/MT on week to Yuan 2,453.5/MT, both including the 13% VAT.
Although domestic steel scrap prices have softened, market participants held the view that the decrease may be limited, as scrap prices will be supported by the ongoing supply tightness.
“We are short of scrap resources at present,” a scrap trader in East China’s Jiangsu province told Mysteel, adding that their volume of steel scrap collected was half of normal levels.
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